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The Changing Nature Of The Employment Relationship Business Essay

4724 words (19 pages) Essay in Business

5/12/16 Business Reference this

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Problems faced by mangers. Business environment is changing drastically in todays corporate world. In early years of current management era manager were suppose to work exclusively with equipments, data and systems; performing traditional tasks. But scenario of management responsibilities has been changed significantly and today’s manger faces issues like cross training, personnel management , interdepartmental communication and widening job scope. Globalization is shaping and re-shaping business environment, resulting in increase of competitors, demand of new sourcing strategies and facing new markets with new demands.

Irregular flow of information often subject to quantitatively strong fluctuations, controlling the flow of information is necessary otherwise these fluctuations can become detrimental. Information controlling is the analysis, evaluation and importance attached to the data that collected and provided with the data under various criteria. Because day by day managerial job is becoming more and more hectic manager needs to continuously look for new ways to improve speed and quality along with reduction in rising cost.

Rising costs is another problem for the managers. Rising in the cost of services and wages is becoming more and more troublesome for managers. In current environment there is no guarantee of the employee’s being loyal to company, then in that case, to get more money employees ask for higher wages. Also there is requirement to keep the cost of services, provided by company under constant watch. If company starts loosing because of rising service cost then mangers put attention to solve this issue.

As complexity of electronic data processing increases, security often decreases. Not only does this pose problems in the form of breaches, it also has legal ramifications with regard to license. This problem especially faced in IT industries. IT companies buy very expensive software and after some months or years new version comes up, then again managers need to change their strategy along with change in technology. Customers may want to change or upgrade to new technology, then managers has to negotiate for the money and services, this may lead to unsatisfactory customer service.

Mainly following are the main challenges faced by today’s managers

Responding to Globalization: Various forces of globalization are reshaping the business environment generating new competitors and demanding new sourcing strategies and market. In dynamic market situations it’s very hard for managers to predict any concrete goal and strategy for the business development. Short term strategy may work very well but for long term, goal setting is the problem. Again dynamic market conditions of global economy make the profit prediction shaky. No one is able to predict the variations in the profit and losses, business can make. Responding to globalization is becoming more and more important; this result in redefining business model. Today change is happening at a rate that does not afford organizations the luxury of managing one major change at a time. Today managers are facing two questions because of globalization, how does relentless change redefine the nature of management and the structure of an enterprise? And what role should management play in re-shaping the enterprise?

Managing work force diversity: Because of globalization and open market system for business, management has to face diversity in work force. Now a day’s businesses are spread over different cities in various countries. Thus many times not only gender and age diversity, but cultural diversity becomes essential to manage work force. Basically heterogeneity of people becomes challenge for the managers because of variations in the ethics, motives and working culture.

Improving quality and Productivity: Main problem for the management is to decide, what is to produce, how much is to produce and where is to be produce. Management has to decide either to produce different products or to emphasis on one product. Once deciding this, managers have to make sure that the quality of the product is good. It takes long time for the organization to create a market about the product; but if there is any lacuna in quality and productivity then because of high competition it’s become hard for the product to sustain in market.

Improving customer service: Improving customer service is sometimes managers think they will get around to in time. But that time rarely comes. Changes in the requirements or changes in the taste of customers become hurdle in the improvement of customer service. To solve this issue many times managers try to set up scenarios that challenge employees and cover the full range of customer requests. At times management also keep two scenarios running parallel and asks employee to maintain balance.

Along with above problems managing labor force is again a challenge for managers. Now days there is no unwritten contract of being loyal to an organization, because of this many employees seems to be fired from the organization or they leave the organization for getting good salary job. In the absence of contract between employee and organization, employee may decide to leave an organization in the middle of project work. This is very challenging situations for managers to deal with.

To overcome these challenges managers have to modify the working culture. Managers need to be aware of the skills of their subordinates and people under them. Empowering of employees is the best way to get maximum output from them. People get bore because of routine work, then to get more output managers can make changes or innovations in the working style. Along with the challenges discussed above, managers have to make efforts to understand their employees. If managers are able to gel with their employees then only employee will be happy to work with the manager, and he/she will be ready to face or tackle the challenges faced by managers. By knowing employee managers will be in a position to understand the working capacity of employees and allocate the work accordingly. This will also help for the performance appraisal and to know liking of an employee about the job and the work allocated to him/her.

Conclusion: Considering many changes in the working environment and globalization today’s managers are facing many new challenges comparing to previous years. Today’s managers are coming up with new ideas and theories about the challenges faced by them. Inflation and changing rates of foreign exchanges are also creating challenges to managements, to handle this managers have to come up with new innovative ideas.


The shift from a manufacturing economy to a services economy from production of goods to production of ideas, and from the machine age to the information age has been accompanied by many transformations. Rather than producing goods, the service firms produce ‘ideas’. Organizations in the ‘services era’, such as software, financial services, and biotechnology firms, depend on ‘intellectual capital’. People create ‘intellectual capital’ and are therefore, the most valuable asset of a firm. Even the environment within which firms conduct business today is very different and much more complex and dynamic when compared to the environment fifteen years ago. Firms no longer compete or operate nationally only. Organizations are no longer governed by the business, legal and political environment of their own nations only. As the world becomes one global playing field, the environmental changes in countries other than the home country of a firm affect business decision and the performance of firms. Several societal and global phenomena have challenged the management of human resources. Thus, changes in the economic, business, social and cultural environments have brought about a transformation in the HR function and the roles and responsibilities of HR professionals.

Some of the significant environmental trends and changes faced by HR managers that pose major challenges are as follows:

Trends in the business environment

The changing nature of work

Demographic, societal and work-force trends

The changing nature of the employment relationship.

Globalization of Business

A major environmental change that has taken place in the last fifteen years is the globalization of business. The world has become a global village and business has become global in character. Organizations are venturing beyond national boundaries in the pursuit of business opportunities. Toyota Motor Corporation makes cars in USA and India, Mc Donald’s sells burgers in India and hamburgers in China, and Marks and Spencer’s sells products in India. Every other product sold by Wal-Mart stores Inc. is made in India. This is the time when buildings are conceptualized in the US designed in India and built in China. Very recently, Ford Motor Co. (Ford) announced its plans to invest $ 1 billion in products and plants in the Asia-Pacific region in the next few years to maintain its presence in the fast-growing markets.

Outsourcing has made India a Manufacturing hub, especially for the automobile sector; with cheap labour providing one of the competitive advantages. Government policy reforms and growth against an appreciating rupee have also facilitated this trend. Large numbers of manufacturing assembly jobs that require low skills have moved from the US and Western Europe to developing countries like China, Thailand, Malaysia, and India. India’s manufacturing and services companies invested $10 billion overseas in 2004. The top 15 Indian IT, software and related companies have invested mostly in developed countries. Like the IT and automobile industries, domestic hospital chains from India, such as Apollo Hospitals Group, Fortis Healthcare and Max Healthcare Institute Private Limited, also have ambitious expansion plans in markets as far away as the US, UK, Mauritius, and South-East Asia.

Multinational corporations require employees who can adapt to different cultures, customs, social practices, values, economic and political systems and management approaches, who can work with other employees from differing backgrounds. This has caused new challenges for HR managers. The HRM function of a company must develop systems that will help individuals from different cultural backgrounds to work together. Human resource managers must ensure that employees with the requisite knowledge, skills, abilities, and cultural adaptability are available so that they may be successful in global assignments.

Foreign investment is no longer something that flows only from a developed country to a developing one. Indian companies are on an expansion drive. Indian business houses, like the Tata Group and firms like Ranbaxy Laboratories Limited (Ranbaxy), Wipro Limited (Wipro), Sun pharmaceutical Industries Limited, Crompton Greaves Limited, Asian Paints, and Cognizant Technology Solutions, have struck merger and acquisition deals world wide to become global players. Acquisitions by Indian companies have now become strategic in nature, by which they have been able to take leadership positions in Asia. The table 1.1 depicts major Human Resource Challenges faced by modern businesses in the present scenario.

Table 1.1 Environmental Trends and Human Resource Challenges

Sr. No.

Environmental Trends

Human Resource Challenges


Business Environment

Globalization and increased competition

Managing a global workforce.

Ensuring availability of employees who have the skills for global assignments.

Focusing increasingly on employee productivity to ensure competitiveness.

Ensuring legal compliance when conducting business abroad.

Mergers and Acquisitions

Managing employee insecurity.

Ensuring continued employee productivity.

Developing HR initiatives to manage employee morale.


Managing organizational relationship with survivors

Managing morale and commitment of survivors

Providing outplacement services or relocation for employees who lose jobs.

Providing personal and family counseling to employees who lose their jobs.


Changing Nature of Work

Industry and Occupational shifts

Managing workforce with flexible working patterns.

Focusing on competencies during hiring process.

Designing incentive based compensation.

Developing proactive employee development programmes.

Technological Advancements

Managing a virtual workforce.

Managing employee alienation.

Developing training modules and conducting programmes to provide employees with required skills.

Retraining current employees to mange obsolescence.

Providing work-life balance initiatives.


Manage employee concerns about losing jobs due to outsourcing.

Managing employee morale and productivity.

Flexible Work Arrangements

Managing the loss of organizational control over work.

Developing programmes for motivating the flexible workforce.

Developing ways of ensuring commitment of the flexible workforce to the firm.


Demographic, Societal, and Workforce Trends

Workforce Diversity

Workforce Composition

Devising customized HR strategies for hiring, retaining, and motivating employees belonging to different generations.

Developing life-style driven perks for the new generation employees.

Developing work-life balance programmes.

Workforce Availability

Ensuring the availability of skilled talent to fulfill organizational needs.

Ageing population and workforce

Finding replacement for retirees.

Managing the demand-supply gap for qualified managerial talent due to a large retiring workforce.

Developing mentoring programmes to ensure the skills of experienced mangers are passed on to new managers.

Obsolescence training and retaining of older employees.

Managing retirement policies.

Conducting programmes to retain experienced employees.

Educated and knowledge workforce

Ensuring the continued supply of trained manpower.

Training new hires.

Partnering with universities and developing academic initiatives to meet projected shortage of skilled manpower.

Training employees in computer skills, communication skills, and customer handling skills.

Emphasizing re-training and development activities.

Women in workforce

Strategizing to attract and retain educated and skilled women workers.

Conducting programmes for women who opt for career breaks.

Providing facilities such as crèches, flexible working hours, etc.

Changing family structures

Developing work-life balance programmes.

Global Workforce

Developing diversity training programmes.

Developing HR initiatives directed to workforce diversity.

Identifying and training expatriate managers for overseas assignments.

Developing equitable pay plans for individuals working in different countries.

Contingent Workforce/workforce flexibility

Developing systems to motivate the temporary workforce and elicit commitment from them

Helping the temporary employees to quickly adapt to the organization to reach their full potential


Changing Nature of Employment Relationship

Offering challenging jobs to employees.

Managing rewards for enhancing employee performance.

Providing opportunities for enhancing skills through training, development, and educational programmes.

Developing programmes for employee commitment.

Understanding value differences across different employee groups and customizing HR programmes.

Source: Agarwala, Tanuja, “Strategic Human Resource Management”, Oxford Publication, 2007.

Another recent change faced by HRM in the present business scenario is that of Mergers and Acquisitions. Companies today need to be fast growing, efficient, profitable, flexible, adaptable, and future-ready and have a dominant market position. Without these qualities, firms believe that it is virtually impossible to be competitive in today’s global economy. In order to gain access to new markets and fresh ideas, companies often choose to grow via Mergers & Acquisitions (M&A) rather than concentrating their efforts on their own business activities. Such inorganic growth is often viewed as a faster way to achieve growth for the company. Especially in technology driven industries, where growth is often accelerated through increased innovations, and one way for the firms to compete is to align themselves with those companies that are developing the innovative technology. Such alignment is achieved through M&A activities. Successful manifestation of such activities involves complex procedures and processes in order to integrate both organizations and align them as per a common unified objective.

It has created certain problems for an organization. One of the problems associated with M&A’s is the retrenchment of staff that becomes surplus due to rationalization of operations. For example, in the financial services sector, M&A activity between 1996 and 2006 caused an aggregate employment decline. Due to M&A, sector experts predicted a loss of more than 300,000jobs in the banking sector between 1999 and 2002. When negotiations for M&A are on, employees of the concerned firms are subject to several rumours that cause insecurity about the future. Thus, HRM is faced with several challenges before, during, and after the M&A decision.

In the present era, the competitive advantage of organizations is linked to ‘knowledge’. There is a lot of emphasis placed upon dissemination of knowledge, and knowledge workers within organizations. Therefore, there is an increased focus on management of the knowledge resource in organization. Thus, in the 21st century, the HRM function has a key role to play in shaping the competitive position of the organization. To compete effectively in the knowledge economy, a firm must have what Ulrich calls ‘organizational capabilities’.HRM plays an important role in creating, developing, and managing the organizational capabilities that are necessary for competing in the knowledge economy. Human resource mangers have to create effective teams within a diverse workforce; tap talent throughout the organization by recruiting, retaining, and developing people at all levels; build and integrate cultures as mergers and acquisitions become common; and develop employee commitment toward organizational vision. Human resource management is confronted with major challenges in the present knowledge economy. Thus, HRM is no longer simply focused on ‘managing people’ or confined to traditional HR functions rather; it is now responsible for managing the capabilities within the organization. The Table 1.2 given below elaborates upon the challenges facing HRM in the knowledge economy.

The four major HRM roles in the Knowledge economy are as:-

Human Capital Steward

Knowledge Facilitator

Relationship Builder

Rapid Deployment Specialist

Technology has had a tremendous impact upon the global business environment. Communication, transportation and production efficiency are various areas of business which have been enhanced by the development and improvement of technology. As continual enhancements are made, the world continues to “grow smaller” and businesses have further reach than ever.


The most important technological development to impact the global business environment is the world of computers. There are various programs which help maintain records of inventories and shipments. Email allows for instantaneous communication almost anywhere in the world. Besides its speed, email is easily forwarded and retained. The communication in the global business environment is improved with the use of email.

The impact of computers on the global business environment is wide-ranging and also includes the Internet, which is a useful tool for international companies. By using the Internet, companies across the world can perform research and learn more about partners and suppliers.

Conference Calls and Video Conferencing

Conference calls allow people in multiple locations to be involved in the same conversation. Video conferencing provides the same service, but with the added benefit of all parties being able to actually see each other. Both of these forms of communication have a definite impact on the global business environment. With either form of technology, a parent company in Norway can have a conversation with a raw material supplier in Brazil and a manufacturing plant in Taiwan. This improves communication on a global scale and enables all parties to understand specific plans and agreements.

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The shipment of raw materials and finished products is absolutely vital to any business, but particularly those with an international scope. Transportation technology enables a company on one continent to send its raw materials or products to another company in a different continent. Technological advancements in airplanes, cargo ships and railways allow for quicker, cheaper delivery, which impacts business by making global distribution more feasible.

Manufacturing Technology

Increased efficiency of manufacturing plants has a certain impact on the global business environment. By having the capacity to produce materials and products more quickly and efficiently, a company is able to produce quantities needed to supply global demand. Robotic technologies and factory lines have enhanced the speed at which materials and products are manufactured. For a company to be a player in the global business field, it must be able to keep up with demand.

Shipment Tracking

Corporations now have the ability to track shipments virtually anywhere across the world. Global Positioning Systems (GPS) allow accurate tracking. The implication of this technology on the global business environment is the ability to let customers know exactly where their shipments are at any given time. This technology creates secure relationships within the global business field.

Competitors fill a need for business owners by keeping them on the cutting edge.

Without competitors, a business would have no reason to keep prices in check. It would create a monopoly which is never good in any society. When two competitors compete for business, the market (customers) are the ones who decide who they will patronize with their dollars. Prices are usually the first element people choose when deciding which business or product to go with.

Competitors drive innovation and keep new ideas and procedures moving forward. Imagine if McDonald’s were the only fast food hamburger restaurant in the world. There would never be a Burger King to compete. All food would taste bland and boring.

“Everyone is always looking to build a better mousetrap”

Many consumers and social advocates believe that businesses should not make a profit but also consider the social implications of their activities. We define social responsibility as a business’s obligation to maximize its positive impact minimize its negative impact on society. Although many people use the terms social responsibility and ethics interchangeably, they do not mean the same thing. Business ethics relates to an individual’s or a work group’s decisions that society evaluates as right or wrong, whereas social responsibility is a broader concept that concerns the impact of the entire business’s activities on society. From an ethical perspective, for example, we may be concerned about a health care organization or practitioner over- charging the provincial government for medical services. From a social responsibility perspective, we might be concerned about the impact that this overcharging will have on the ability of the health care system to provide adequate services for all citizens.

The most basic ethical and social responsibility concerns have been codified as laws

and regulations that encourage businesses to conform to society’s standards, values, and attitudes. At a minimum, managers are expected to obey these laws and regula- tions. Most legal issues arise as choices that society deems unethical, irresponsible, or

otherwise unacceptable. However, all actions deemed unethical by society are not nec-

essarily illegal, and both legal and ethical concerns change over time. Business law

refers to the laws and regulations that govern the conduct of business. Many problems

and conflicts in business can be avoided if owners, managers, and employees know

more about business law and the legal system. Business ethics, social responsibility,

and laws together act as a compliance system requiring that businesses and employees

act responsibly in society.

Business ethics are moral principles that guide the way a business behaves. The same principles that determine an individual”s actions also apply to business.

Acting in an ethical way involves distinguishing between “right” and “wrong” and then making the “right” choice. It is relatively easy to identify unethical business practices. For example, companies should not use child labour. They should not unlawfully use copyrighted materials and processes. They should not engage in bribery.

However, it is not always easy to create similar hard-and-fast definitions of good ethical practice. A company must make a competitive return for its shareholders and treat its employees fairly. A company also has wider responsibilities. It should minimise any harm to the environment and work in ways that do not damage the communities in which it operates. This is known as corporate social responsibility.

Codes of behaviour

The law is the key starting point for any business. Most leading businesses also have their own statement of Business Principles which set out their core values and standards. In Anglo American”s case, this is called “Good Citizenship”.

A business should also follow relevant codes of practice that cover its sector. Many companies have created voluntary codes of practice that regulate practices in their industrial sector. These are often drawn up in consultation with governments, employees, local communities and other stakeholders. Anglo American has played an active part in initiatives such as the Extractive Industries Transparency Initiative, the United Nations Global Compact and the Global Reporting Initiative.

Anglo American has also contributed to the Voluntary Principles on Security and Human Rights. This code sets out principles and practices for ensuring that a company”s need to ensure the security of its employees and operations in volatile countries does not adversely impact upon the local population. Thus the Principles provide guidance on how both private and public security forces assigned to protect a mining operation or an oil and gas facility should be vetted, trained in human rights, monitored and controlled.

Anglo American also aims to ensure that it plays a role in protecting the human rights of its employees and local people in countries in which it operates. The company supports the principles set forth in the Universal Declaration of Human Rights.

All companies need to make a profit. However, Anglo American recognises that this objective must take account of ethics as shown in its statement on corporate responsibility: “Though providing strong returns for our shareholders remains our prime objective, we do not believe that these can or should be achieved at the expense of social, environmental and moral considerations. Indeed a long-term business such as ours will only thrive if it also takes into account the needs of other stakeholders such as governments, employees, suppliers, communities and customers.”


An important process used by Anglo American is that of stakeholder engagement. This enables it better to understand the perspectives and priorities of external groups that are affected by its activities and to factor them into its decision-making processes. To support this work at a local level, Anglo American has developed a Socio-Economic Assessment Toolbox or SEAT process.

This “toolbox” helps managers to measure the impact of activities on the company and communities. It also helps to improve a mine”s contribution to development through, for example, using its supply chain needs to generate new businesses or to improve the water or electricity infrastructure. They use this toolbox to engage with stakeholders including community representatives.

Sometimes communities have to be resettled, with government sanction, in order for important mineral deposits to be accessed. This can cause controversy and divisions in the communities concerned. International best practice sets out a number of key stages in such a process including the need for structured consultation, fair compensation and the importance of restoring and enhancing the livelihoods of people in their new locations.

Recently Anglo American has had to undertake two such relocations in South Africa at the villages of Ga Pila and Motlhotlo. These were undertaken with the support of the provincial government and local tribal leadership and after consultation with local people lasting for several years leading to agreement with each householder. New villages have been built with better houses and infrastructure and more land for farming. The relocation programme was voluntary. The relocation programme at Motlhotlo is still under way but at Ga Pila 98% of those living in the old village took up the offer to move to the new village

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